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August Blackout May Have Cost More Than Initially Estimated


A power cut in August that knocked out power for more than a million people in England and Wales and caused widespread disruption to the transport network could have cost more than initially estimated.

Iain Staffell, senior lecturer in sustainable energy at Imperial College London, said current cost of the blackout, estimated at £15 million, may not reflect the full economic impact, given the significant disruption to infrastructure and services.

The outage, which began 9 August at 5pm knocked out power to thousands of homes and at Newcastle Airport and Ipswich Hospital, where a backup generator failed and switched off traffic lights and left commuters stranded on trains. Although power was restored by 6:30pm, the disruption to the transportation network continued into the next day.

Current estimates of the economic effects of power cuts come from a 2013 study by London Economics. The economic impact to industrial and commercial customers was calculated by dividing their economic output by the amount of electricity they use, to reach a figure of £1,400/MWh.

The values for domestic and SME customers were determined by asking these customers how much they would have to be paid to voluntarily suffer a power cut. This produced figures of £10,289/MWh for and £35,488/MWh for SMEs.

The weighted average of these figures is £16,940/MWh. Multiplying that by the volume of power lost on 9 August produced a total cost of around £15 million for the blackout.

But Staffell thinks the calculations are wrong and the total economic toll may be greater.

Speaking to Utility Week, he said that because power cuts are now so rare in the developed world, it’s difficult to cost their impact. Previous estimates of the impact in the UK have ranged from £1,000/MWh to £70,000/MWh.

He called for London Economics’ methodology to be rethought “to factor in all of the knock on implications of a power disruption,” including disruption of transportation networks and services.

“We probably need to have more evidence and maybe a fresh look at how much we should valuing this stuff,” he said. “If we had a much higher valuation of discontinuity of supply that might change the way that things are being run and operated.”

A new figure could mean the electricity systems operator (ESO) holds more frequency response in reserve.

Security of supply will become increasingly important as the UK increases its reliance on renewable resources, which deliver intermittent power and make running the energy grid more complicated, Staffell said.

The National Grid attributed the blackout to the near-simultaneous failure of a gas-fired power station in Bedford and several units of an offshore wind farm in the Humber, both due to lightning strikes. This led to a loss of 1.4 gigawatts, around 5% of the grid’s electricity.

The government and energy market regulator Ofgem opened investigations into the outage, considering whether the National Grid’s processes, particularly regarding outages, are fit for purpose. The investigation could lead to a fine for National Grid, of as much as 10% of company's annual turnover.

Lauren Smith
Lauren Smith

Lauren Smith has worked as a journalist and copywriter for most of the last decade, covering technology, energy, and consumer rights, in the US and UK.

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